past the hour thanks for being with us here's a quick recap of your headlines one the words and i'm sure our actions don't match the top u.s. officials say the pentagon's considering military options on syria despite president obama's dismissal of unilateral airstrikes. by exporting revolutionaries libby is accused of running grell lot of training camps for foreign militants as nato comes under fire on the u.n. for refusing to investigate civilian deaths during its air raids against gadhafi.

nuclear talks on iran are due to restart after a year and a limbo tapper on warrants a vote be futile less world powers stockpiling even more sanctions on its economy. coming up max and stacey take on the week's financial fallout it's the cause a report coming up next. tiger this is a cause report you know the global economy has been severed amid the financial markets. no major organs remaining this is not

a boat accident this is shop boy a lot of girl. max that sounds like they need. masters and must global what happened to the money well this is not a boat accident the facts suggest that the customer money at m.f. global stolen twice first by course signed next by j.p. morgan the system was twisted to hide the involvement of powerful figures with strong ties to the political system and multinational corporations operating out of new york and the city of london as richard dreyfus said in the movie jaws well this is not a boat accident now remember the response from richard dreyfus was to the corpse of the first victim of jaws and to the public to the tourists coming to amity it was a boating accident that had killed this woman and one of course when he saw this the body he said this is not a boating accident and we see the same thing in the financial markets now is

regulators and politicians seeking office to keep on telling us it was just a boating accident was just a little accident a few derivatives blew up accidentally there is no predator involved here there's no violence but the equivalent is they keep saying it's a liquidity problem this is a problem of liquidity we need to keep stoking the banks i would. more liquidity they don't mention it's not a liquidity issue it's an insolvency issue and as these banks go insolvent as they go bankrupt they go to zombification the event that is them to keep them alive is accompanied by austerity measures so the austerity measures are in direct proportion to the cash transfusions that are helping keep the zombie banks alive and no this is not a boating accident this is a outright predatory shark attack and people are dying out there they should be told specifically that this is what's going on but they're being held in the dark

to try to get them to play along and to go to the beach and to swim in these shark infested predatory waters so let's talk about two of these sharks in particular shark boy and lava girl and apparently these are the nicknames for a day we dime and blythe masters of keeping working in the commodity pits j.p. morgan's life masters is the twenty eleven queen of commodities shark boy a lava girl there fierce performance in crushing goldman sachs in the commodity pits uncertainty diamond of life monsters the fearsome nicknames shark boy a novel girl apparently shark boy and lava girl are celebrating the fact that they beat their arch rival goldman sachs their earnings from j.p. morgan two point eight billion from the commodity pits in twenty eleven guess how much goldman sachs was one point six billion what's the difference in the earnings how much more did david morgan earn one point two billion where do you know that

number from the m.f. global scandal so one point two billion of course as we started this show is missing one point two billion that was transferred apparently to d.p. morgan yeah absolutely j.p. morgan stole one point two billion from the m.f. global clients and this is the exact amount that they're. claiming that they've made a head of goldman sachs over on their desk of death apparently there is really lot of girl life masters is competing against isabelle he lets who is the goldman sachs head of commodities trading and isabel according to blith masters can't cope with our superior platform in industry connections a certain dark mistress of the universe has been heard to say if you are the queen you don't make markets you own the markets and everyone including goldman sachs pays the exactly they own the markets it's a rent seeking proposition they have

a monopoly pricing there's no free market there's no competition they simply bludgeon these markets you know most spectacularly in the markets you know they would for example last week there was eight hundred million ounces of silver traded in one single day this is more than all the silver that's mine during the course of a year this is directly out of blights corrupt lawyer in this sprawling this trading activity that smashed the price of silver just to keep in good with her paper god masters who hate gold and silver because they pursued the god of paper well i thought with these two women love a girl i live master's and isabel battling out in the commodity pits i thought i would jump in there with silver stacy you're coming out of a strong you know book lovely girl and gold wad you know they've got a competition coming with silver surfer and stacy. well now we

established that the predator in this situation on the bankers using these credit derivatives quote here goes on ms masters gained notoriety for pioneering credit default swaps blamed by many for the financial crisis she acknowledged in a two thousand and eight speech. that she had been granted the woman who created weapons of mass destruction although she defends the products saying the people using them were at fault well no that's like saying that people who ate tainted meat already fault for getting say a critical fault swap is an illegitimate security because it masquerades as an insurance product but there's no collateral there's no way to pay out if in fact it's needed as we're seeing in europe now there's a default in greece but apparently they're not going to pay out of that part of the falls off they can pay out of the court a false business good there's no such thing they don't exist there's no money to

back them up unless they go back into the wholesale market king cancer they more or phony loans which of course would require more austerity but of course as we established in the previous episode or kaiser report taking morgan itself on the board of is the term and whether or not there has been a credit events. glose mausers is creating austerity. purging into the marketplace fake unaccounted for nonexistent nonsensical part of the false swaps are we. do nothing except create austerity for these poor people so we've established in the commodity pits j.p. morgan came out on top by one point two billion which happens to be the magical number of the m.f. global missing funds futures market was created really for farmers so let's look at some of the victims the farming victims of m.f. global farmer faces planting season with seeds of distrust so first the article

from c.n.n. looks that dean tossed in a minnesota farmer who had two hundred fifty three thousand dollars with m.f. global he notes that he can track a hog from his farm to somebody stable yet somehow he ponders authorities haven't fully tracked the missing one point two billion or who was behind it he said money doesn't vaporize if my account is empty somebody else's is full of point of course you can track through the real economy how goods and services flow but in the shadow banking system in the dark exchange world of life and goldman there is no accountability there is no tracking they can reach and grab one point two billion dollars and claim it vaporized i mean that's that's absurd of course and in vaporized they stole it and the article then goes on to point out that most of them of global customers have received seventy two percent of their money back executives at the chicago mercantile exchange and chicago board of trade like to

tout the fact as a great feat but they'd better duck if they ever step foot on a farm they might just get punched in the jaw costume is still out seventy thousand dollars and the other important point here max as i said futures markets were originally established to protect from the you know the wild nature of nature so the these farmers invest a lot to plant and then it's not for a very long time afterwards that they can harvest. and in that time drought can happen severe storms any sort of thing well the article points out that this guy hoffman his this has zero hat he's now not head he's just planting so this is creating another too big to fail system because if you think the quiddity in financial markets is too big to fail we need this what about food on your table there's no heads against black masters i mean this farmer should be able to buy life masters futures contracts on the open market to hedge himself against this

part of tory nightmare blight masters and the entire futures markets has come full circle as you point out they were invented originally to give farmers a way to get some price stability but they were hijacked by the financial futures markets in the seventy's and eighty's so you have currency futures and treasury bill features and all kinds of security features that are outside of the agricultural sector now they themselves have morphed into those colossus is putting a risk the very farmers for whom these structures are created for to begin with so now you've got futures risk you've got tornado rist hurricane risk flooding rist drought risk and life masters risk so they need to be a futures contract for farmers to protect themselves against life masters. who exactly they treat it like it's a game it's a competition between lava girl and it is the get out of it what is supposed to be about protecting agricultural industry so they say for an industry that relies on the futures market it is faith in the system that has been most raddled they speak

to brad move moves feeding grain in his or his brother's view the m.f. global scandal amounts to the largest bank heist in u.s. history so where is the national outrage they ask where's the all points bulletin for those responsible and why have the occupy wall street protesters remain silent about the scandal and the eighth largest bankruptcy in u.s. history while the occupy wall street folks don't have the financial literacy to dig down into the machinations of these markets to really put up a cogent. and the point is well taken that the futures markets have been securitized a lot of financial eyes and grown into many many many times greater than their usefulness so i mean in the oil market for example for every one barrel of oil that's traded amongst nations there are sixty four thousand barrels traded in the paper market in the futures market that doesn't do anyone any good except the people who are involved in the corruption of those markets and whenever they make

a mistake they get bailed out and to pay for the bell regardless of those austerity measures well speaking of austerity measures and where it's the national outrage there are some nations that have national outrage and express that and we see that in greece responding to blythe masters austerity measures and here is how the political elite think once you respond to their crimes former french pm greece could face a military coup in an interview in a leading french newspaper former french prime minister michel or a car savior that increased austerity measures such as those imposed on greece by its lenders could well see the country having to deal with an explosive social upheaval sooner rather than later he said nobody seems to be saying it but the only way out for greece could well be a military coup he said while also expressing his belief that no nation can be democratically governed when you cut back twenty five percent of its earnings. right so they want to go back to the junta so they went from the hood to the troika

back to the junta were the going to have democracy well exactly but he points out when you have to cut back twenty five percent of its earnings as we just pointed out those farmers in america have lost twenty eight percent of their earnings so do they need a military rule over them because they might get to one really because they're upset that belies masters and is the. and you let from goldman sachs still all their money i mean there's already a mill to martial law in the us you already can't speak up and offer any dissent you're already surveilled twenty four seven it's already a military coup it's sharkboy it's normal girl it's the know it all along so lonely in big bruises face here or thank so much for being on the kaiser report thank you max don't go away much more coming why stay right there.

welcome back to the kaiser report imax keyser time now to go to new york and speak with economist ever fessor backer michael has

a back to us and welcome back to the kaiser report thank you very much max all right back to michael hudson you were in an alley where you were pretty like a rock star are you there what happened well the italian journalist pile of barnard bited up four of my colleagues and myself from the university of missouri kansas city to explain the principles of modern monetary theory which is what our university is known for we're sort of being antithesis to the university of chicago and our job was to explain to the year or two of the year europeans in general and the italians in particular that the austerity is not necessary there is no need at all for the government to balance budgets in fact governments are supposed to run a budget deficit that's so they provide the private sector production in a cut consumption economy with the money and the credit but it needs in the income but it needs to grow basic keynesian policy we also pointed out that when

a central bank creates credit runs at levels that is not hyper inflationary what isn't lation area is the commercial banking systems slugging the economy with credit so the last thirty years to get up real estate prices start and bond prices and providing credit for corporate raged takeovers and what is basically loading down the economy with debt and it is led to the. it's lation today all right so it's a variation i keynesianism our updated version of keynesianism so how different their backgrounds and then one is already what already exists book angels hoping that new credit would do what a government deficit would do that new credit would be used to up front new investment. investment labor in motion but today's new credit doesn't do that credit is extended today to take over a company and buy property and real estate that's already in place but almost all

the new capital investment in the american economy is funded by the retained earnings of corporations not credit so the financial sector is spent decouple from the production sector and i what we want to do it missouri is really light the sectors and modernize an industrialized credit for what people expected the banking system to be a century ago opened the industrial revolution was still gaining power paris a sign a class a city university said the city really here gang hangout is the antithesis of what's happening at the chicago school of economics so we know that there's a heavily influenced component from mr carrados school that informs people like christine lagarde is there on the i.m.f. and earth or msi obama administration and most identified with milton friedman and neo liberalism so this is a dynamic between these two the free marketers believe that you can have

a free market and what you pay on part and ignore in fencer all this notion of any alternative so there's no interaction at all by the chicago school of entity we're actually where the university of missouri at kansas city u m k c and there is a blog if you were to google your own case the economics blog your get the blog you know economic perspectives editor. by stephanie colton who's the incoming department chairman of the economics department and you'll see we have a regular commentary on what's happening in the economy and an alternative to the austerity and the pro financial lobby hearing the chicago art school we have said so along with me in italy where stephanie calton build black was talking about law and another blogger marshall auerbach so the four of us were basically there explaining for three solid dates all about monetary theory and it's amazing there

were over twenty one hundred people in the stadium it was a sports stadium and when we walked in on a friday night two weeks ago we couldn't believe that we walked down the aisle and walked and walked and walked and none of us that ever had such a child get it audience and they were all there early stage to the end they really wanted to hear a modern monetary at their age and i'll central banks were supposed to run deficit not sort of classes in order to reflate the economy our university of missouri advantages city with modern modern terry theory receive like rock stars and only of course you're saying that the right the other side the to coddle school doesn't allow for any kind of debate going on but it does have one apostle with a big platform in part at the new york times correct ah he's more of

a neo classical sort of liberal but he doesn't focus on the debt issue or deputy place another we do and he believes that the government should balance the budget pretty much he doesn't follow modern monetary theory to anywhere near it he tries to be sort of the voice in the middle and he doesn't really discuss our theory or discuss up by a fine if we're the unspeakable crimes we're the people that liberals. well talk about where the people at the university of chicago in the magazines that it's put it senator isn't it will not permit a discussion so basically the free marketers are spent thursday they don't believe in a free market of ideas they believe and they didn't show it remember the first thing the chicago boys didn't show it was closed down every economics department in a country they thought that when they controlled one of their professors told harvard or was accused of us sitting as our colorado springs what economists

should be excluded and he said he had no idea that they were going to have their stomachs cut open shit what our prisons thrown out over the oceans three he had no idea there are families that are already killed he had no idea that the people he was citing were going to be victims of the operation condor that killed up aus and some labor leaders and economists he had no idea that when he and the other people were closing down all the departments they were to be herded into stadiums and machine gun killed tortured shop at best the effect of the chicago school and certainly he had he had no intention of ever acknowledging that there was any idea except for his own son story about people that's why he tried to say program harvard instead his harvard institute of international economics for the students all protested and said we will not have men with blood on our hands coming here and degrading our university with her intellectual intolerance apart that are as of now

they are the other side the right side those caught the chicago scar they claim that the free markets on their side we know that their their school is dominant in the current economy and the current economy is generating the biggest wealth in income gaps in the history of the united states and is clearly failing and in many countries around the world. so where do they where does this term free market get lost because it's not a free market this week august they will have inverted but the classical economists meant by free market when adam smith and john stuart mill and the one thousand fenchurch and regress of era spoke about free markets they wanted a free markets from the rocky they wanted to get the markets free of landlords free of the bankers and freedom monopolies the idea of free market to classical economics was to bring prices in line with the actual technologically necessary

costs of production so that it wouldn't include land rent land rent would be tech it would be the tax base it wouldn't include interest charges it wouldn't include predatory banking charges and monopolies were either to be regulated they keep their prices in line with the actual costs like america regulates a lot of the bill that will likely if you tell it's going to charge or the most monopolies will be as in europe kept in the public domain and operated as public utilities and if there was something basic like education or roadside these would be provided freely in order to minimize the economies cost of production and make it more competitive this was the whole philosophy of the industrial revolution and it was the free market idea that the classical economists say that but the rocky age front back around world war one they began to inverted and their idea of a free market was free for predator freeform monopolist free for our edwardes to

gouge whatever rights they could get and to free themselves from taxation so that the government had a tax labor and tax industry and the result is that the american economy today under the so-called free market has such a high cost of living and the high cost of production that our labor can't compete internationally that's why america's balance of. trade has moved so far into deficit if an american worker has to pay forty percent of those income on housing if yes to pay fifteen percent for it health care and social security if i see a wage withholding if you yesterday pay another fifteen percent in excise taxes sales taxes and income taxes and other taxes and if you ask the k. other debts for a credit card debt education debt then obviously even before he spends about one

third of a salary on books and services his monthly not is so high that he's priced out of the market and that's why american can't compete in exports except for agriculture which is heavily subsidized by the government and of course the military industrial complex except exports to other diplomatically through internationally go shares and so free market is what is killing the american economy and it's not free at all it is free for predators not free for labor not free for industry not the kind of free market that adam smith talked about oh is that what you're describing here is in a lot of ways you could say that the occupy movement is simply a replay of what the original american colonies were feeling one may before they wrote the declaration of independence they wanted to be free from the rent seeking occupying force of the british and now the occupy wall street is

saying we want to be free from the rent seeking occupation of wall street bankers and they so therefore my question is where did the occupy people do themselves a service by maybe taking some classes at university of missouri kansas city and brushing up on what you're talking about there to give them some intellectual firepower all the occupy wall street people do have on sunday here in new york a regular. meeting with a financial advisory committee kathy only all runs it and there are people like you smiths from naked capitalism is there i'm usually there they've kelly who's done a few senators i can now make advisors there a lot of wall street insiders are there with a look at where money managers i work as fund managers but this is a hell of a way to make money but we look rather make money in a way that helps the economy productive not in a predatory way so you can be sure that there are some pretty smart people advising

the occupy wall street movement for what could happen this summer when the school lets out that's asacol right well we're out of time but thanks so much for being on the cars report dr michael hansen thank you very much mick and that's going to do it for this is this an advertiser report with me max kaiser and stacy herbert our thank my guest dr michael hudson really just i mean he now plays this out kaiser reported r.t. t.v. that are you until next time x. guys are saying. i'm.